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If you invest in property, choose studio apartment

For the first time from more than five years the prices of one, two and three-bedroom apartments in Sofia are below the key threshold of 700 euro per square meter, according to a report by one of the leading real estate sites.

Decrease from the beginning of the month marked the three types of properties, the smallest dropped down with 1.9% which is € 680 per square meter, one bedroom decreased with 1.4 % which is 697 euro per square meter and two bedroom flats are cheaper with 0.7% - 695 euro per square meter.

On the other side of the decrease in prices for buying a property, is the rent, which is going up. Rents for two-bedroom apartments increased with 2.7%, while the studio and one-bedroom homes decreased with around 2.8% -3%.

Much has been said about the impact of tax rates on deposits, which will enter into force at the beginning of the year. Experts do not expect a drastic reduction in the deposit base, the rest of the sectors appropriate for an investment alternative to deposits, are hoping to at least slow their growth and redirecting some of the savings to themselves.

Of course, it comes first to the stock market and real estate sector. The first alternative would hardly feel a significant positive effect, the stock market has become relatively popular among many people at the wrong time (during its record high reached four years ago) and investment registered significant losses. It will take some time for the people to believe again and to return to this alternative.

Real estate has always met in a much greater degree of our mentality, although recent years have been difficult for this sector, prices recorded decrease of more than 40% of their peak values.

Normalization of interest rates on mortgage loans, and much more onerous policy for giving loans by banks, is likely to prompt many savers to look at this alternative.

When it comes to investment, there are two main factors to be considered by investors. On one hand, the risk of capital loss, on the other - the expected profit.

Market development over the past year led studio apartments in Sofia to mark their biggest decrease compared to other types of property (because of the weak demand for them).

Amid their highest prices months ago, now studios are cheaper per square meter than one-and two-bedroom apartments. They are characterized by the highest rent per square meter and have the best profit on their rental.

Based on current levels of prices and rental yields for studio apartments in Sofia the profit is rate is about 6.5%, compared to 5.7 % for one-and 5.2% for the two-bedroom homes.

From an investment point of view, studio properties are distinguished by several positive features which are invisible at first glance, but they make them better investment.

First the costs for common areas are lower, which are usually between 5 and 10 percent of the net area of a home.

Secondly furnishing one room (furnished apartments are more easily rented) in fact comes much cheaper than to furnish two-three rooms, which are often with two bathrooms (the bathroom is one of the most expensive rooms in the home furniture along with kitchen).

And last but not least, the cost of maintenance and repairs, and taxes paid to a smaller home will be significantly lower compared to larger ones.

Of course there are also disadvantages of the single dwellings - namely weaker demand for them because they are suitable especially for people who are alone, which significantly limits their demand and makes them unsuitable for couples, young families with children.